Issue Brief

Institute for Future Strategy Issue Brief Vol. 59

Spatial Strategies for Regional Co-Evolution: The Five Megaregions and Three Special Zones Strategy Boosts Growth but Falls Short of Achieving Balanced Development

This issue brief examines the realities of metropolitan concentration and spatial imbalance in South Korea and empirically evaluates how the government's Five Megaregions and Three Special Zones (5G3S) strategy for balanced national growth may affect regional economic growth and spatial equity. It also identifies the key conditions and policy priorities necessary for the successful implementation of the strategy.

The concentration of population and economic activity in the Seoul metropolitan area has become a structural challenge that undermines the efficient allocation of national spatial resources and may constrain Korea's long-term growth potential. Although the Seoul metropolitan area accounts for only about 11.8% of the country's land area, it contains more than half of the nation's population and generates more than half of its gross domestic product. Most major corporations are also headquartered in the capital region, further widening the gap between the metropolitan area and the rest of the country. In response, the government has shifted away from traditional decentralization-oriented regional development policies and introduced the Five Megaregions and Three Special Zones (5G3S) strategy, which is built on functional integration across large regional blocs with the aim of creating a polycentric national spatial structure capable of counterbalancing the dominance of the capital region.

The study further estimates the long-term effects of transport infrastructure investment equivalent to 1% of GDP in 2025 across seven non-capital regions—comprising the four megaregions and the three Special Self-Governing Provinces—over the next 30 years. The findings suggest that the 5G3S strategy would generate average annual economic growth of approximately 0.18% while reducing regional disparities by about 0.33% over the same period. However, the growth benefits are not expected to be evenly distributed. In some regions, particularly the Chungcheong megaregion, the strategy could create new disparities between regional hub cities and surrounding areas. The study also compares an alternative framework that consolidates the megaregions into three larger regional blocs, finding that while this approach would produce stronger economic growth, its effects on reducing regional disparities would be comparatively weaker. The brief concludes that the success of regional bloc policies depends on building endogenous cooperation within each region, establishing complementary roles between hub cities and smaller cities, providing greater fiscal support and regulatory flexibility for the Special Self-Governing Provinces, and designing stable regional investment financing based on rigorous empirical evidence.